Making ends meet can be a challenge, especially when unexpected events like global recessions and pandemics happen. Yet, far from being uncommon, these unexpected downturns happen every few years. Sometimes it’s something personal like a health problem or unexpected career change. Other times, it’s a national event like the 2000’s dot-com bust, 9/11, the 2008 recession, or the most recent downturn.
Here’s a couple quick tips to help prepare for the unexpected:
Know what you’re spending and what you’re making
It’s important to have some system to record income and expenses. There’s a lot of different options out there; the important thing is to pick one and actually use it.
If you don’t have a system already, consider using my one-page planning spreadsheet to track expenses and budget for the future.
Spend Deliberately
Focus on minimizing structural, recurring charges. Often financial tips will focus on reducing small consumer purchases. However, many Christians already live fairly frugally, requiring larger lifestyle choices to reduce spending if necessary.
Rent: Rent (or a mortgage) is one of the largest recurring monthly expenses. While not a choice you want to make on a whim, moving to a neighborhood where rent is cheaper or property values are lower may be the most meaningful financial choice that you make.
For example, I used to rent a studio apartment on the west side. This cost about $1,100/month. I then moved to the Allied neighborhood with a friend and rented a 2-bedroom apartment for $850/month. Besides the intangible benefits of friendship, the move also saves me $8,100 annually. That’s around $40,000 over a 5-year period.
Health Insurance: When I left my previous employer I had the option of continuing with my current health insurance at around $350/month. Based on my health and lifestyle, it made more sense for me to go with a less expensive Christian health-cost-sharing program like CHMinistries, which costs me around $123/month. This works out to a difference of $1500 annually and has the added benefit of my money not helping to fund people getting immoral procedures done.
Invest Deliberately
I recommend dividing up money between three categories:
- Liquid assets: these are things like savings accounts, CDs, and treasury bonds that can be cashed out relatively easy and carry low risk. You need enough of your money stored here to get you through rough periods. However, due to the Fed’s rather loose policies interest rates are low and money in these assets won’t earn much.
- High-earning assets: stock market index funds can earn a much higher returns but come with risk. One strategy is to save up about a year’s worth of expenses and put the rest of savings into stocks.
- Assets that return non-financial benefits: this would include your local church and other organizations like a church-associated school. Putting money here isn’t an “investment” in the traditional monetary sense but does serve to build up God’s Kingdom in the community around you. Having a large nest egg isn’t very useful if the community around you has descended into wickedness.